Te take i whaitikanga ai te hiki i te whakaputanga mahi Why lifting productivity is important

There are three main ways to achieve higher incomes:

• increase the number of people working
• increase the number of hours worked
• increase productivity.

New Zealand has traditionally relied on the first and second methods to boost national income, which has resulted in more people working longer hours and low real wage growth. 

The Organisation for Economic Co-operation and Development (OECD) has highlighted that productivity in New Zealand remains well below that of leading OECD countries (OECD, 2017).

Productivity is calculated as the ratio of the volume of outputs to the volume of inputs. 

High productivity means that a large amount of output is produced with little input. Find out more about productivity on the Stats NZ website.

Lifting productivity is an important goal as it has the greatest potential to improve quality of life and create broader more sustainable benefits. These include a more highly skilled workforce, higher wages, more efficient use of resources, and innovative and more resilient businesses.

Since 2000, the knowledge intensive service sector in Auckland has grown at an average annual rate of 3.9 per cent. (ATEED, 2017)

This sector:

• covers firms providing finance, professional, scientific and technical services
• is supported by a highly skilled and knowledge-enabled labour force and is highly productive.

While Auckland seeks growth in those sectors that are highly productive it is also important to improve productivity across all businesses. 

Innovation through new technologies and automation can drive the change required to lift productivity within firms and reshape existing business models.

Firms can lift productivity by:

• increasing research and development
• encouraging collaboration between industry and research institutions
• attracting skilled migrants
• improving infrastructure and land use settings that enable mass benefits.

References

ATEED (2017). Auckland: an emerging knowledge capital of the Asia-Pacific (PDF 4.5MB) [accessed 06/11/2017]

OECD (2017). New Zealand: June 2017 overview (PDF 870KB). OECD Economic Surveys. [accessed 06/11/2017]